Aug. 20 (Bloomberg) -- Russia added about 9.4 metric tons
of gold valued at $400 million to reserves in July as it
expanded holdings for a fourth consecutive month to the highest
in at least two decades.

The country’s stockpile, the fifth-biggest, increased to
35.5 million ounces (1,104 tons) last month from 35.2 million
ounces at the end of June, data posted on the central bank’s
website showed. The amount of gold now held is the most since at
least 1993, according to International Monetary Fund data.

Russia’s reserves, which overtook those of Switzerland and
China this year, almost tripled since the end of 2005, IMF data
show. The ruble declined about 6.3 percent against the dollar
since June as the worst standoff with the U.S. since the Cold
War intensified. The conflict, stemming from President Vladimir
Putin’s annexation of Ukraine’s Crimea peninsula in March, has
led to sanctions that have hurt trade and threatened to send
Russia’s $2 trillion economy into a recession.

“Russia has been the largest official buyer for years,”
Eugen Weinberg, the head of commodities research at Commerzbank
AG in Frankfurt, said today by e-mail. “It’s a part of its
long-term strategy of amassing gold reserves and diversifying it
foreign-exchange reserves.”

European leaders are pushing to halt the conflict that’s
killed more than 2,000 people and fractured Ukraine. The war,
which Ukraine and its allies say is being fueled by Putin’s
support for insurgents and which Russia denies it’s involved in,
helped gold rise 7.7 percent to $1,294.18 an ounce this year on
demand for a haven. The metal averaged $1,311.82 last month,
valuing Russia’s gold addition at $398 million.

Currency Reserves

“Especially given the current relations cool-down with the
West and re-orientation to the East, it might be expected that
the share of euros and dollars fall further and yuan and
probably gold increase further,” Weinberg said.

Central banks may add as much as 500 tons to reserves this
year, the World Gold Council said on Aug. 14. Nations increased
holdings by 409 tons last year and 544 tons in 2012.

Gold accounts for about 9.7 percent of Russia’s total
reserves, according to the London-based gold council. That
compares with about 70 percent for the U.S. and Germany, the
biggest bullion holders, the data show. Italy and France have
the next largest reserves.

Russia mined 248.8 tons of gold last year, ranking it as
the third-biggest producer, behind China and Australia,
according to GFMS, a research unit of Thomson Reuters Corp.
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